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President-elect Trump won’t officially take office for another week, but investment bankers say a boom in Trump-related deals is already underway — transactional activity stymied by the regulation-burdened Biden administration is poised to explode.
That was the conclusion of a panel of investment bankers and private equity executives discussing the return of corporate dealmaking at the Frontiers of Digital Finance conference in Miami on Tuesday.
“We’re going to have more jobs in the market in 2025 than we’ve had in the last two years,” said Jeffrey Levine, a director at investment banking giant Houlihan Lokey, who spoke on the panel. “In the last three years, more capital has been raised than in the history of private equity, but it has not been deployed.”
The conference, sponsored by a private lending company called Biz2X, which provides online lending solutions to small businesses, featured some major players in finance and at the intersection of finance and politics. Patrick McHenry, a former North Carolina congressman and chairman of the House Financial Services Committee, said in his opening remarks that Trump’s victory, combined with Republicans retaining control of the House of Representatives and gaining a majority in the Senate, would usher in a new era of deregulation that would encourage capital formation.
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Rep. Patrick McHenry, Republican of North Carolina and ranking member of the House Financial Services Committee, speaks during a hearing in Washington, DC, U.S., Thursday, June 23, 2022. The Federal Reserve chairman gave his most explicit (Photo: Eric Lee/Bloomberg via Getty Images / Getty Images)
“Washington is open and the United States economy is open, McHenry said. “The post-financial crisis era of regulation, lawmaking and policy is dead and gone.”
During a panel discussion on mergers and acquisitions, David MacGown, managing director of Barclays’ Financial Institutions Group, noted that he is seeing an increase in appetite for dealmaking, anticipating a more lenient regulatory approach from the Federal Trade Commission, the Federal Communications Commission, the incoming Trump administration. and the Antimonopoly Department of the Ministry of Justice.
Biden’s men running those three agencies have halted almost all merger and acquisition activity in recent years; those who chose to defy regulatory restrictions faced protracted legal battles with the Biden deal police.
Still, Trump is not expected to give carte blanche to all deals. Its regulators remain skeptical of Big Tech’s power and may view Google, Apple, Amazon, Facebook and other tech giants with suspicion as they continue to grow.
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After Trump finalizes the appointments of top people at key agencies, other companies, such as banking, are likely to face less regulatory scrutiny than Big Tech.
MacGown said Barclays is currently involved in several transactions that are a direct result of the post-election meltdown in dealmaking.
During a panel discussion, Avi Mehrotra, global head of Goldman Sachs’ activism, shareholder advisory and takeover defense practice, said he foresees consolidation in regional banks—smaller to mid-sized banks with assets under $100 billion.
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Because of their size, regional banks benefit from mergers due to so-called synergies of scale. This refers to the cost savings and revenue increases that result from the increased size and scale that comes with the merger of the two entities.
MacGown noted that the four largest investment banks — Goldman Sachs, Morgan Stanley, JPMorgan and Bank of America — have more than a trillion dollars in assets, and last year made more than half of the banking industry’s profits combined.
Wall Street sign in front of the American flag (Reuters/Mike Segar/Reuters Photos)
McGown sees this as a potential risk of concentration, noting that lighter regulations could bring in smaller boutique firms to reduce that risk.
“Part of the value of consolidation is finding ways to grow further, and part of it is that we’re less concentrated at the top,” he said.
In addition to regional banks, other areas of expected accelerated M&A activity are the fintech, industrial and consumer sectors, according to Mehrotra.
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People close to the matter say the media industry is also ripe for consolidation as companies such as Warner Bros. Discovery, Comcast and others are suffering from declining advertising revenue and so-called cord-cutting, where consumers ditch traditional cable packages and get more of their news and entertainment online.
“The fact is that Biden thought he was helping consumers by stopping the deals, and all he was doing was making those companies weaker and less able to compete,” one media executive told Fox Business on condition of anonymity.
